IRELAND has a long and rich history of gold mining, dating back to the 1800s and continuing even today.

The first Irish gold rush occurred from 1795 through to 1860 with around 300kg of the mineral hand-mined from deep within the Emerald Isle.

Discoveries are still being made today with gold worth €546million recently uncovered at a mining site in Clontribet, Co. Monaghan just this week.

Valued at around €1,050 an ounce, discovering gold can be a life-changing experience – but where do you look?

According to the experts, Ireland has a couple of notable hidden gold hotspots – but do you live near one of them?

History indicates that some small clues to the true location of these hidden goldmines can be found in the place names of many of Ireland’s villages, mountains, rivers and towns.

These places were handed their names for a reason and indicate that there could well be gold in these old hills.

Here are some of the most famous supposed gold hotspots.

SLIEVEANORE

Slieveanore, which roughly translates as ‘Mountain of Gold’, near Feakle in Co. Clare is a townland thought to have been named in reference to the fact there was once an abundance of the mineral around the region.

Whether any still remains is a source of some speculation.

COOMANORE

Down towards the south coast of Ireland, between Bantry and Dunmanway in Co. Cork sits Coomanore, which translates to ‘Hollow of the Gold’ and is said to offer riches to anyone able to locate the source of that most precious and valued of minerals.

LUGANORE

Take a trip down to Luganore near Clonmel, Tipperary and you may come back with more than you bargained for.

Also known as the ‘Hollow of the Gold’, it’s attracted plenty of interest down the years from people looking to find their fortune.

GLENANORE

Otherwise known as the Glen of the Gold, Glenanore in Co. Cork is another favourite stomping ground for those eager to uncover the secrets living within these lands.

Several other possible gold hotspots, meanwhile, have emerged as a result of notable discoveries down the years.

LIMERICK

Ancient mining and smelting equipment and materials was uncovered in a bog near the popular Irish city.

Thought to be several thousand years old and sizeable in scale, the discovery prompted speculation that there could be more gold hidden in the region.

WICKLOW

A giant sluice box, dating back thousands of years, was uncovered under several feet of river gravels in the Woodenbridge area of the city. What else lies beneath?

Glendalough, Co. Wicklow. Picture: Tourism Ireland

Gold has also been discovered The River Dargle, The Avoca, The Avonbeg and at the foot of Bray Head. Other areas of Ireland where gold has been discovered include: The River Dodder near Rathfarnham, Cregganbaun and Croagh Patrick, Cavanacaw, Clontibret, Lecanvey and Bohaun in County Glaway.

In fact, it is likely that there are many more sources all over the country, given the sheer quantity of gold found dating as far back as the Bronze Age and now stored in national museums.

The gold-silver ratio measures how many ounces of silver it takes to buy an ounce of gold. If the ratio is at, say, 75, then gold is 75 times the price of silver and it would take 75 ounces of silver to buy an ounce of gold.

Geologists seem to agree that there is somewhere around 15 times more silver in the Earth’s crust than gold. Gold is therefore 15 times rarer.

In theory, therefore, the gold-silver ratio should stand at 15 – gold should be 15 times the price of silver. And until the 20th century, that was mostly the case. Indeed, there are many examples of nations which operated under a bi-metallic standard – the USA until 1875 being perhaps the most famous – where the exchange rate between the two metals was 15, more or less.

However, in the 20th century, as money and metal went their separate ways, that ratio of 15 has become an ever-more distant memory. One day it will get there again, the most ardent of silver bugs will tell you.

And on one day in 1980, it did – on 18 January 1980, silver went to $50 as the infamous Hunt Brothers attempted to corner the market.

But since then the closest it has been was 30, in April 2011, when silver touched $50.

Here, courtesy of our man in Australia, gold and silver data hound Nick Laird of goldchartsrus.com, is the gold-silver ratio since 1720.

Gold-silver ratio since 1720

You can see how the ratio was constant around 15 until the late 1800s, after which it became a volatile beast, climbing as high as 100 (in World War II) before coming back down to earth at 15, then repeating.

Even today, with gold at $1,320, at a ratio of 15, silver should be $88. It isn’t. It is $16.

Given silver’s historical relationship with money and the flaws in the fiat money system, many – including your author at one stage, until he grew cynical – thought that silver would “do a bitcoin”. But it didn’t.

Then there are all the industrial uses, particularly in electrics. Many thought silver would “do a lithium”, or a cobalt, or a uranium.

It didn’t. It flirted with such notions in 2011, but $50 proved the cap.

Silver is like a friend’s errant younger sibling – oodles of potential, but never quite delivering on its promise, beyond the occasional glimpse of greatness.

The bottom line is this: for all the beauty of silver, and for all its potential as an investment, an industrial metal and a precious metal, the reality is that since it lost its monetary role, it has never delivered on its potential for more than a few days in market extremis. When it was official money, that backing meant its value held; without it, the value does not seem to sustain.

Silver might be a constant disappointment – but it’s time to buy

But now, having properly put the boot in, I am going to tell you to buy silver. Not only that, I am going to suggest that you should even sell gold – which has been a much more reliable store of wealth – to buy it. My reasoning is simple: the gold-silver ratio has gone above 80.

This chart shows the gold-silver ratio since 1980. You can see that, on every occasion since around 1994 that the ratio has gone to 80, or just above (where I have drawn the dotted red line), the ratio has soon fallen.

Gold-silver ratio since 1980

It happened in 2016, in 2009, in 2003, in 1997 and in 1995.

The risk is that it carries on going up to the 100 area, just as it did in 1991. Given that the ratio has only done this twice in all recorded history – once in 1991 and once in 1941, during a world war – I suggest that the probability of this happening is low. And, if it does go that high, it will come back again within a year or three.

The likelihood is that the ratio will come towards the lower end of the “normal range” in the high 40s or lows 50s, at which point you switch out of silver and back into gold. But then the gold you sold for 80 ounces of silver, you are now buying back for around 50 ounces, so you’re ending up with a lot more of it.

The blue sky – or BS – argument is that silver goes back to 30, or even its historically and geologically-normal ratio of 15. One day it will. But don’t hold your breath.

More reasons to be bullish on silver

In the meantime, there is another development that adds some fuel to the bullish silver fire. That is the latest positions of the traders on the Chicago futures exchanges.

These traders are bracketed into three groups – the large speculators, the small speculators and the commercials. The commercials and, to a lesser extent the small speculators, are considered the smart money, while the large specs are considered the least wise of the three.

Nothing is so simple, of course. Nevertheless, the large specs (the uninformed money) are now net short for the first time since 2003. Back then silver was $5.

What’s more, every time since then that the large speculators’ net position has moved close to the zero line, that has proved to be a buying point for silver. All in all this is a very bullish development, given that the silver price is largely set in the futures markets.

It’s worth noting that the equivalent position for gold is not nearly so bullish. To be uber excited, you would want to see them both in alignment. Shucks. You can’t have everything.

There are all sorts of ways to buy silver. You can buy bullion from a dealer such as Sharps Pixley (although this can be VAT-able); you can buy an ETF from your broker; you can go to one of the online dealers who store it for you (Goldcore, Goldmoney, BullionVault); you can use a leveraged product; or you can buy one the silver mining companies.

I’ll re-visit this ratio in six months or so to see how it’s panning out.

Editors Note: While silver has disappointed in the short term it has performed very strongly over the long term and in the last 15 to 20 years. Over a 16 year period, silver has risen 265%.

Since 2003, silver has outperformed stocks, bonds, property and even gold with gains of 12% per annum in dollars and gains of 12.8% in pounds, 11.1% in euros and similar gains in other fiat currencies.

We would not advocate selling gold bullion in order to buy silver bullion. By all means reduce allocations to gold and add to silver but we believe both merit a place in a diversified portfolio as a store of value and both will likely again outperform stocks, bonds and property in the coming years.

]]>https://wsgoldcoins.wordpress.com/2018/03/16/buy-silver-and-sell-gold-now/feed/0johnking1265Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblershttps://wsgoldcoins.wordpress.com/2018/03/16/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-4/
https://wsgoldcoins.wordpress.com/2018/03/16/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-4/#respondFri, 16 Mar 2018 04:40:07 +0000http://wsgoldcoins.wordpress.com/?p=2254– Gold Cup at Cheltenham – ‘The Olympics’ of the European horse racing calendar

– Gold Cup trophy contains 10 troy ounces of gold – worth £9,000

– £620 million bets on horses, 230,000 pints of Guinness will be drunk, 9.2 tonnes of potato eaten

– Since the 5th century BC, gold has been the ultimate prize to award champions and gold has been constantly and universally awarded as top prize

– Gold, like the summit of human achievement, is very rare and hence precious

– Gold is a great prize and a good bet but works best as store of value and better to take a ‘punt’ on gold than gamble on the horses

Cheltenham Gold Cup – Wikipedia

The Cheltenham Gold Cup race takes place this Friday, March 16 at 3.30pm. The Gold Cup is the finale of the Cheltenham Festival, the Olympics of horse jump racing, which runs from yesterday to this Friday.

This week 65,000 people have been gathering in Cheltenham for the 28 races which will be raced over the four day gathering with over £4,600,000 of prize money will be handed out this week at Cheltenham Festival.

The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing. The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize for winning the Gold Cup is £600,000. and the beautiful Gold Cup trophy made with 10 ounes of gold.

The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. As we know the bookie nearly always win.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?

Wikimedia

The Greatest Show on Turf

It is nearly 200 years since the most exciting race in the UK calendar was first run in 1819. 230,000 people are expected to attend this year, with 10,000 of them expected to make the special trip from Ireland in order to celebrate their jockey riders, amazing horses and indeed St. Patrick’s Day week – Saturday being March 17th.

And what comes hand in had with horse racing? The big spending, gambling and lots of drinking.

Over 230,000 pints of Guinness will be drunk, 9 tonnes of potato eaten and 3 tonnes of smoked salmon enjoyed. Cash machines will be working hard to keep up with everyone’s spending as they churn out £2.2 million of notes and assist punters to place over £1 million of bets per race.

And what are they all there for? They’re there for the run up to or the main event itself that is the Cheltenham Gold Cup, a near 200 year old race that is the darling of the racing calendar.

What makes it so exciting is that it is the only major race that is not run on the flat. Whilst the predecessor to the Gold Cup race was first run flat in the 19th century it wasn’t until 1924 that there was the “introduction of a level weights extended three mile steeplechase, called The Cheltenham Gold Cup”.

The Gold Cup is a chance to see the best in horse racing. It is so prestigious that it is rarely cancelled, and is considered to be the most important of steeplechase races. For race-goers the event is a chance to win big, ever hoping that the bookies get it as wrong and misplace their odds.

For the riders, trainers and owners the race is not only about the honour that comes with winning but also about getting their hands on the prize money and the prestigious Cheltenham Gold Cup trophy.

I’ve got a golden ticket cup

On Friday, 30 horses and jockeys will run the race of their lives in the hope of bringing home 10 ounces of gold, neatly melted into the form of a small trophy.

As with the Olympic medals and the Oscars, a new gold cup is made each year for the owners. But a gold cup hasn’t always been the reward for this infamous race.

The owner of the first winner, Spectre, received 100 guineas. At the time, the coins would have contained a quarter ounce of gold akin to British gold sovereigns, so 25 ounces of gold in total.

The gold price in 1819 was $19.39, so this prize in gold terms would have been worth $484.75. That same amount of gold today is worth $30,750. Not bad for a prize that was received nearly 200 years ago.

There is less gold in today’s prize cup than there was in that stash of guineas nearly 200 years ago, but 10 ounces is nothing to be sniffed at. With less than 50% of the gold that was on offer when the race was first run in 1819, this year’s cup is worth £9,950.

Is this why we reward the best of the best with gold?

Because it will serve to reward them in decades to come? Really, no one will care about a piece of paper that says they won but a gold coins, a gold bar or indeed a beautiful gold cup will be valued and stand the test of time.

Gold gives value to our winners

Whether it’s spending on your ‘gold card’, or competing for a gold medal, receiving a Nobel Prize or even travelling Gold Class, the yellow metal is still believed to be the best.

We can go back to the early days of gold’s discovery that we regarded gold as the ultimate way to recognise our champions. In his play Plutus, even the comic playwright Aristophanes wrote in 408BC of how Olympians should be awarded with gold .

Olympic first place medal from the Athens Games of 1896 (obverse), from the collection of the Olympic Museum (IOC via Wikimedia)

“Why, Zeus is poor, and I will clearly prove it to you. In the Olympic games, which he founded, and to which he convokes the whole of Greece every four years, why does he only crown the victorious athletes with wild olive? If he were rich he would give them gold.”

Whilst the Greek playwright was joking, his point was a valid one and one that still strikes a chord today. We crown the most talented amongst us with gold. Even when the headlines have died down, even when no-one can remember who won a famous race four years ago, the winner is still left with a timeless piece of gold that will always have a value.

This is more important than ever in a world that places far greater value on material stuff – many frequently superficial and disposable things – that really do not deserve it.

A prize is no better than jewellery or fancy coin

Whilst the cup might contain a whopping ten ounces of gold (more than an Olympic gold medal or Academy Award), this doesn’t mean the price of the metal is reflected in the perceived value of the prize.

In 2010, the 1988 Cheltenham Gold Cup owners had their prize stolen from them . At the time of winning (assuming the make-up of the Cup is the same as it is today) the cup’s gold content was worth £2,446. Today, that same cup is worth £9,950. To the winners, however they could not be objective about its real value. To them, it was understandably worth a lot more.

When it was stolen, the owners offered £15,000 for its return. At the time, the Cup’s owner told the BBC, ‘”What’s the point in melting it down? To me it’s worth a fortune. It’s the sentimental value, not the monetary value that’s at play here.”

This is where prizes are similar to collectible coins or jewellery, the price beyond the underlying metal content is purely subjective. Whilst you might buy a commemorative coin for a few thousand dollars, the market may well disagree with you in a few years’ time and deem it only to be worth the few grams of gold that it really is.

The same can be said for jewellery which receives a huge markup when it arrives on the market and also attracts VAT and sales tax – unlike tax free gold coins and bars and VAT free silver coins.

Whilst one might argue that the Cheltenham Gold Cup is worth more than its weight in gold, this is only the case for the winners and the small market that is interested in horse racing memorabilia.

The beauty about owning 10 ounces of pure gold bullion is that you know it will only ever be priced according to the value of the precious metal content and that the market is highly liquid. You will not go from one buyer to the next wondering if you are getting a fair price, or if you will be able to sell it at all.

Gold is for winners, not for the gamblers

Of course, there is only one Cheltenham Gold Cup to be won this week, but there are plenty of opportunities for punters to win big (and lose) at the bookies. For the £600 million plus that is at stake this week, we wonder if some of those gamblers might be better to take a leaf out of the competitors’ book and ‘go for gold’ instead.

Gold is a form of insurance to protect you when this game goes wrong and the house of cards collapses as it did in 2008.

When it comes to gold, you’re doing the opposite of gambling, you’re buying insurance for the times when others make a bad bet playing with your money. You are taking some of your hard earned ‘chips off the table’ of the global financial casino.

Rather than punting on horses, punters would be better served also having a safe haven punt on gold.

]]>https://wsgoldcoins.wordpress.com/2018/03/16/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-4/feed/0johnking1265Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblershttps://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-3/
https://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-3/#respondThu, 15 Mar 2018 22:15:33 +0000http://wsgoldcoins.wordpress.com/?p=2252– Gold Cup at Cheltenham – ‘The Olympics’ of the European horse racing calendar

– Gold Cup trophy contains 10 troy ounces of gold – worth £9,000

– £620 million bets on horses, 230,000 pints of Guinness will be drunk, 9.2 tonnes of potato eaten

– Since the 5th century BC, gold has been the ultimate prize to award champions and gold has been constantly and universally awarded as top prize

– Gold, like the summit of human achievement, is very rare and hence precious

– Gold is a great prize and a good bet but works best as store of value and better to take a ‘punt’ on gold than gamble on the horses

Cheltenham Gold Cup – Wikipedia

The Cheltenham Gold Cup race takes place this Friday, March 16 at 3.30pm. The Gold Cup is the finale of the Cheltenham Festival, the Olympics of horse jump racing, which runs from yesterday to this Friday.

This week 65,000 people have been gathering in Cheltenham for the 28 races which will be raced over the four day gathering with over £4,600,000 of prize money will be handed out this week at Cheltenham Festival.

The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing. The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize for winning the Gold Cup is £600,000. and the beautiful Gold Cup trophy made with 10 ounes of gold.

The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. As we know the bookie nearly always win.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?

Wikimedia

The Greatest Show on Turf

It is nearly 200 years since the most exciting race in the UK calendar was first run in 1819. 230,000 people are expected to attend this year, with 10,000 of them expected to make the special trip from Ireland in order to celebrate their jockey riders, amazing horses and indeed St. Patrick’s Day week – Saturday being March 17th.

And what comes hand in had with horse racing? The big spending, gambling and lots of drinking.

Over 230,000 pints of Guinness will be drunk, 9 tonnes of potato eaten and 3 tonnes of smoked salmon enjoyed. Cash machines will be working hard to keep up with everyone’s spending as they churn out £2.2 million of notes and assist punters to place over £1 million of bets per race.

And what are they all there for? They’re there for the run up to or the main event itself that is the Cheltenham Gold Cup, a near 200 year old race that is the darling of the racing calendar.

What makes it so exciting is that it is the only major race that is not run on the flat. Whilst the predecessor to the Gold Cup race was first run flat in the 19th century it wasn’t until 1924 that there was the “introduction of a level weights extended three mile steeplechase, called The Cheltenham Gold Cup”.

The Gold Cup is a chance to see the best in horse racing. It is so prestigious that it is rarely cancelled, and is considered to be the most important of steeplechase races. For race-goers the event is a chance to win big, ever hoping that the bookies get it as wrong and misplace their odds.

For the riders, trainers and owners the race is not only about the honour that comes with winning but also about getting their hands on the prize money and the prestigious Cheltenham Gold Cup trophy.

I’ve got a golden ticket cup

On Friday, 30 horses and jockeys will run the race of their lives in the hope of bringing home 10 ounces of gold, neatly melted into the form of a small trophy.

As with the Olympic medals and the Oscars, a new gold cup is made each year for the owners. But a gold cup hasn’t always been the reward for this infamous race.

The owner of the first winner, Spectre, received 100 guineas. At the time, the coins would have contained a quarter ounce of gold akin to British gold sovereigns, so 25 ounces of gold in total.

The gold price in 1819 was $19.39, so this prize in gold terms would have been worth $484.75. That same amount of gold today is worth $30,750. Not bad for a prize that was received nearly 200 years ago.

There is less gold in today’s prize cup than there was in that stash of guineas nearly 200 years ago, but 10 ounces is nothing to be sniffed at. With less than 50% of the gold that was on offer when the race was first run in 1819, this year’s cup is worth £9,950.

Is this why we reward the best of the best with gold?

Because it will serve to reward them in decades to come? Really, no one will care about a piece of paper that says they won but a gold coins, a gold bar or indeed a beautiful gold cup will be valued and stand the test of time.

Gold gives value to our winners

Whether it’s spending on your ‘gold card’, or competing for a gold medal, receiving a Nobel Prize or even travelling Gold Class, the yellow metal is still believed to be the best.

We can go back to the early days of gold’s discovery that we regarded gold as the ultimate way to recognise our champions. In his play Plutus, even the comic playwright Aristophanes wrote in 408BC of how Olympians should be awarded with gold .

Olympic first place medal from the Athens Games of 1896 (obverse), from the collection of the Olympic Museum (IOC via Wikimedia)

“Why, Zeus is poor, and I will clearly prove it to you. In the Olympic games, which he founded, and to which he convokes the whole of Greece every four years, why does he only crown the victorious athletes with wild olive? If he were rich he would give them gold.”

Whilst the Greek playwright was joking, his point was a valid one and one that still strikes a chord today. We crown the most talented amongst us with gold. Even when the headlines have died down, even when no-one can remember who won a famous race four years ago, the winner is still left with a timeless piece of gold that will always have a value.

This is more important than ever in a world that places far greater value on material stuff – many frequently superficial and disposable things – that really do not deserve it.

A prize is no better than jewellery or fancy coin

Whilst the cup might contain a whopping ten ounces of gold (more than an Olympic gold medal or Academy Award), this doesn’t mean the price of the metal is reflected in the perceived value of the prize.

In 2010, the 1988 Cheltenham Gold Cup owners had their prize stolen from them . At the time of winning (assuming the make-up of the Cup is the same as it is today) the cup’s gold content was worth £2,446. Today, that same cup is worth £9,950. To the winners, however they could not be objective about its real value. To them, it was understandably worth a lot more.

When it was stolen, the owners offered £15,000 for its return. At the time, the Cup’s owner told the BBC, ‘”What’s the point in melting it down? To me it’s worth a fortune. It’s the sentimental value, not the monetary value that’s at play here.”

This is where prizes are similar to collectible coins or jewellery, the price beyond the underlying metal content is purely subjective. Whilst you might buy a commemorative coin for a few thousand dollars, the market may well disagree with you in a few years’ time and deem it only to be worth the few grams of gold that it really is.

The same can be said for jewellery which receives a huge markup when it arrives on the market and also attracts VAT and sales tax – unlike tax free gold coins and bars and VAT free silver coins.

Whilst one might argue that the Cheltenham Gold Cup is worth more than its weight in gold, this is only the case for the winners and the small market that is interested in horse racing memorabilia.

The beauty about owning 10 ounces of pure gold bullion is that you know it will only ever be priced according to the value of the precious metal content and that the market is highly liquid. You will not go from one buyer to the next wondering if you are getting a fair price, or if you will be able to sell it at all.

Gold is for winners, not for the gamblers

Of course, there is only one Cheltenham Gold Cup to be won this week, but there are plenty of opportunities for punters to win big (and lose) at the bookies. For the £600 million plus that is at stake this week, we wonder if some of those gamblers might be better to take a leaf out of the competitors’ book and ‘go for gold’ instead.

Gold is a form of insurance to protect you when this game goes wrong and the house of cards collapses as it did in 2008.

When it comes to gold, you’re doing the opposite of gambling, you’re buying insurance for the times when others make a bad bet playing with your money. You are taking some of your hard earned ‘chips off the table’ of the global financial casino.

Rather than punting on horses, punters would be better served also having a safe haven punt on gold.

]]>https://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-3/feed/0johnking1265Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblershttps://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-2/
https://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-2/#respondThu, 15 Mar 2018 04:17:17 +0000http://wsgoldcoins.wordpress.com/?p=2250– Gold Cup at Cheltenham – ‘The Olympics’ of the European horse racing calendar

– Gold Cup trophy contains 10 troy ounces of gold – worth £9,000

– £620 million bets on horses, 230,000 pints of Guinness will be drunk, 9.2 tonnes of potato eaten

– Since the 5th century BC, gold has been the ultimate prize to award champions and gold has been constantly and universally awarded as top prize

– Gold, like the summit of human achievement, is very rare and hence precious

– Gold is a great prize and a good bet but works best as store of value and better to take a ‘punt’ on gold than gamble on the horses

Cheltenham Gold Cup – Wikipedia

The Cheltenham Gold Cup race takes place this Friday, March 16 at 3.30pm. The Gold Cup is the finale of the Cheltenham Festival, the Olympics of horse jump racing, which runs from yesterday to this Friday.

This week 65,000 people have been gathering in Cheltenham for the 28 races which will be raced over the four day gathering with over £4,600,000 of prize money will be handed out this week at Cheltenham Festival.

The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing. The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize for winning the Gold Cup is £600,000. and the beautiful Gold Cup trophy made with 10 ounes of gold.

The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. As we know the bookie nearly always win.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?

Wikimedia

The Greatest Show on Turf

It is nearly 200 years since the most exciting race in the UK calendar was first run in 1819. 230,000 people are expected to attend this year, with 10,000 of them expected to make the special trip from Ireland in order to celebrate their jockey riders, amazing horses and indeed St. Patrick’s Day week – Saturday being March 17th.

And what comes hand in had with horse racing? The big spending, gambling and lots of drinking.

Over 230,000 pints of Guinness will be drunk, 9 tonnes of potato eaten and 3 tonnes of smoked salmon enjoyed. Cash machines will be working hard to keep up with everyone’s spending as they churn out £2.2 million of notes and assist punters to place over £1 million of bets per race.

And what are they all there for? They’re there for the run up to or the main event itself that is the Cheltenham Gold Cup, a near 200 year old race that is the darling of the racing calendar.

What makes it so exciting is that it is the only major race that is not run on the flat. Whilst the predecessor to the Gold Cup race was first run flat in the 19th century it wasn’t until 1924 that there was the “introduction of a level weights extended three mile steeplechase, called The Cheltenham Gold Cup”.

The Gold Cup is a chance to see the best in horse racing. It is so prestigious that it is rarely cancelled, and is considered to be the most important of steeplechase races. For race-goers the event is a chance to win big, ever hoping that the bookies get it as wrong and misplace their odds.

For the riders, trainers and owners the race is not only about the honour that comes with winning but also about getting their hands on the prize money and the prestigious Cheltenham Gold Cup trophy.

I’ve got a golden ticket cup

On Friday, 30 horses and jockeys will run the race of their lives in the hope of bringing home 10 ounces of gold, neatly melted into the form of a small trophy.

As with the Olympic medals and the Oscars, a new gold cup is made each year for the owners. But a gold cup hasn’t always been the reward for this infamous race.

The owner of the first winner, Spectre, received 100 guineas. At the time, the coins would have contained a quarter ounce of gold akin to British gold sovereigns, so 25 ounces of gold in total.

The gold price in 1819 was $19.39, so this prize in gold terms would have been worth $484.75. That same amount of gold today is worth $30,750. Not bad for a prize that was received nearly 200 years ago.

There is less gold in today’s prize cup than there was in that stash of guineas nearly 200 years ago, but 10 ounces is nothing to be sniffed at. With less than 50% of the gold that was on offer when the race was first run in 1819, this year’s cup is worth £9,950.

Is this why we reward the best of the best with gold?

Because it will serve to reward them in decades to come? Really, no one will care about a piece of paper that says they won but a gold coins, a gold bar or indeed a beautiful gold cup will be valued and stand the test of time.

Gold gives value to our winners

Whether it’s spending on your ‘gold card’, or competing for a gold medal, receiving a Nobel Prize or even travelling Gold Class, the yellow metal is still believed to be the best.

We can go back to the early days of gold’s discovery that we regarded gold as the ultimate way to recognise our champions. In his play Plutus, even the comic playwright Aristophanes wrote in 408BC of how Olympians should be awarded with gold .

Olympic first place medal from the Athens Games of 1896 (obverse), from the collection of the Olympic Museum (IOC via Wikimedia)

“Why, Zeus is poor, and I will clearly prove it to you. In the Olympic games, which he founded, and to which he convokes the whole of Greece every four years, why does he only crown the victorious athletes with wild olive? If he were rich he would give them gold.”

Whilst the Greek playwright was joking, his point was a valid one and one that still strikes a chord today. We crown the most talented amongst us with gold. Even when the headlines have died down, even when no-one can remember who won a famous race four years ago, the winner is still left with a timeless piece of gold that will always have a value.

This is more important than ever in a world that places far greater value on material stuff – many frequently superficial and disposable things – that really do not deserve it.

A prize is no better than jewellery or fancy coin

Whilst the cup might contain a whopping ten ounces of gold (more than an Olympic gold medal or Academy Award), this doesn’t mean the price of the metal is reflected in the perceived value of the prize.

In 2010, the 1988 Cheltenham Gold Cup owners had their prize stolen from them . At the time of winning (assuming the make-up of the Cup is the same as it is today) the cup’s gold content was worth £2,446. Today, that same cup is worth £9,950. To the winners, however they could not be objective about its real value. To them, it was understandably worth a lot more.

When it was stolen, the owners offered £15,000 for its return. At the time, the Cup’s owner told the BBC, ‘”What’s the point in melting it down? To me it’s worth a fortune. It’s the sentimental value, not the monetary value that’s at play here.”

This is where prizes are similar to collectible coins or jewellery, the price beyond the underlying metal content is purely subjective. Whilst you might buy a commemorative coin for a few thousand dollars, the market may well disagree with you in a few years’ time and deem it only to be worth the few grams of gold that it really is.

The same can be said for jewellery which receives a huge markup when it arrives on the market and also attracts VAT and sales tax – unlike tax free gold coins and bars and VAT free silver coins.

Whilst one might argue that the Cheltenham Gold Cup is worth more than its weight in gold, this is only the case for the winners and the small market that is interested in horse racing memorabilia.

The beauty about owning 10 ounces of pure gold bullion is that you know it will only ever be priced according to the value of the precious metal content and that the market is highly liquid. You will not go from one buyer to the next wondering if you are getting a fair price, or if you will be able to sell it at all.

Gold is for winners, not for the gamblers

Of course, there is only one Cheltenham Gold Cup to be won this week, but there are plenty of opportunities for punters to win big (and lose) at the bookies. For the £600 million plus that is at stake this week, we wonder if some of those gamblers might be better to take a leaf out of the competitors’ book and ‘go for gold’ instead.

Gold is a form of insurance to protect you when this game goes wrong and the house of cards collapses as it did in 2008.

When it comes to gold, you’re doing the opposite of gambling, you’re buying insurance for the times when others make a bad bet playing with your money. You are taking some of your hard earned ‘chips off the table’ of the global financial casino.

Rather than punting on horses, punters would be better served also having a safe haven punt on gold.

]]>https://wsgoldcoins.wordpress.com/2018/03/15/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers-2/feed/0johnking1265Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblershttps://wsgoldcoins.wordpress.com/2018/03/14/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers/
https://wsgoldcoins.wordpress.com/2018/03/14/gold-cup-at-cheltenham-gold-is-for-winners-not-for-the-gamblers/#respondWed, 14 Mar 2018 22:05:14 +0000http://wsgoldcoins.wordpress.com/?p=2248– Gold Cup at Cheltenham – ‘The Olympics’ of the European horse racing calendar

– Gold Cup trophy contains 10 troy ounces of gold – worth £9,000

– £620 million bets on horses, 230,000 pints of Guinness will be drunk, 9.2 tonnes of potato eaten

– Since the 5th century BC, gold has been the ultimate prize to award champions and gold has been constantly and universally awarded as top prize

– Gold, like the summit of human achievement, is very rare and hence precious

– Gold is a great prize and a good bet but works best as store of value and better to take a ‘punt’ on gold than gamble on the horses

Cheltenham Gold Cup – Wikipedia

The Cheltenham Gold Cup race takes place this Friday, March 16 at 3.30pm. The Gold Cup is the finale of the Cheltenham Festival, the Olympics of horse jump racing, which runs from yesterday to this Friday.

This week 65,000 people have been gathering in Cheltenham for the 28 races which will be raced over the four day gathering with over £4,600,000 of prize money will be handed out this week at Cheltenham Festival.

The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing. The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize for winning the Gold Cup is £600,000. and the beautiful Gold Cup trophy made with 10 ounes of gold.

The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. As we know the bookie nearly always win.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?

Wikimedia

The Greatest Show on Turf

It is nearly 200 years since the most exciting race in the UK calendar was first run in 1819. 230,000 people are expected to attend this year, with 10,000 of them expected to make the special trip from Ireland in order to celebrate their jockey riders, amazing horses and indeed St. Patrick’s Day week – Saturday being March 17th.

And what comes hand in had with horse racing? The big spending, gambling and lots of drinking.

Over 230,000 pints of Guinness will be drunk, 9 tonnes of potato eaten and 3 tonnes of smoked salmon enjoyed. Cash machines will be working hard to keep up with everyone’s spending as they churn out £2.2 million of notes and assist punters to place over £1 million of bets per race.

And what are they all there for? They’re there for the run up to or the main event itself that is the Cheltenham Gold Cup, a near 200 year old race that is the darling of the racing calendar.

What makes it so exciting is that it is the only major race that is not run on the flat. Whilst the predecessor to the Gold Cup race was first run flat in the 19th century it wasn’t until 1924 that there was the “introduction of a level weights extended three mile steeplechase, called The Cheltenham Gold Cup”.

The Gold Cup is a chance to see the best in horse racing. It is so prestigious that it is rarely cancelled, and is considered to be the most important of steeplechase races. For race-goers the event is a chance to win big, ever hoping that the bookies get it as wrong and misplace their odds.

For the riders, trainers and owners the race is not only about the honour that comes with winning but also about getting their hands on the prize money and the prestigious Cheltenham Gold Cup trophy.

I’ve got a golden ticket cup

On Friday, 30 horses and jockeys will run the race of their lives in the hope of bringing home 10 ounces of gold, neatly melted into the form of a small trophy.

As with the Olympic medals and the Oscars, a new gold cup is made each year for the owners. But a gold cup hasn’t always been the reward for this infamous race.

The owner of the first winner, Spectre, received 100 guineas. At the time, the coins would have contained a quarter ounce of gold akin to British gold sovereigns, so 25 ounces of gold in total.

The gold price in 1819 was $19.39, so this prize in gold terms would have been worth $484.75. That same amount of gold today is worth $30,750. Not bad for a prize that was received nearly 200 years ago.

There is less gold in today’s prize cup than there was in that stash of guineas nearly 200 years ago, but 10 ounces is nothing to be sniffed at. With less than 50% of the gold that was on offer when the race was first run in 1819, this year’s cup is worth £9,950.

Is this why we reward the best of the best with gold?

Because it will serve to reward them in decades to come? Really, no one will care about a piece of paper that says they won but a gold coins, a gold bar or indeed a beautiful gold cup will be valued and stand the test of time.

Gold gives value to our winners

Whether it’s spending on your ‘gold card’, or competing for a gold medal, receiving a Nobel Prize or even travelling Gold Class, the yellow metal is still believed to be the best.

We can go back to the early days of gold’s discovery that we regarded gold as the ultimate way to recognise our champions. In his play Plutus, even the comic playwright Aristophanes wrote in 408BC of how Olympians should be awarded with gold .

Olympic first place medal from the Athens Games of 1896 (obverse), from the collection of the Olympic Museum (IOC via Wikimedia)

“Why, Zeus is poor, and I will clearly prove it to you. In the Olympic games, which he founded, and to which he convokes the whole of Greece every four years, why does he only crown the victorious athletes with wild olive? If he were rich he would give them gold.”

Whilst the Greek playwright was joking, his point was a valid one and one that still strikes a chord today. We crown the most talented amongst us with gold. Even when the headlines have died down, even when no-one can remember who won a famous race four years ago, the winner is still left with a timeless piece of gold that will always have a value.

This is more important than ever in a world that places far greater value on material stuff – many frequently superficial and disposable things – that really do not deserve it.

A prize is no better than jewellery or fancy coin

Whilst the cup might contain a whopping ten ounces of gold (more than an Olympic gold medal or Academy Award), this doesn’t mean the price of the metal is reflected in the perceived value of the prize.

In 2010, the 1988 Cheltenham Gold Cup owners had their prize stolen from them . At the time of winning (assuming the make-up of the Cup is the same as it is today) the cup’s gold content was worth £2,446. Today, that same cup is worth £9,950. To the winners, however they could not be objective about its real value. To them, it was understandably worth a lot more.

When it was stolen, the owners offered £15,000 for its return. At the time, the Cup’s owner told the BBC, ‘”What’s the point in melting it down? To me it’s worth a fortune. It’s the sentimental value, not the monetary value that’s at play here.”

This is where prizes are similar to collectible coins or jewellery, the price beyond the underlying metal content is purely subjective. Whilst you might buy a commemorative coin for a few thousand dollars, the market may well disagree with you in a few years’ time and deem it only to be worth the few grams of gold that it really is.

The same can be said for jewellery which receives a huge markup when it arrives on the market and also attracts VAT and sales tax – unlike tax free gold coins and bars and VAT free silver coins.

Whilst one might argue that the Cheltenham Gold Cup is worth more than its weight in gold, this is only the case for the winners and the small market that is interested in horse racing memorabilia.

The beauty about owning 10 ounces of pure gold bullion is that you know it will only ever be priced according to the value of the precious metal content and that the market is highly liquid. You will not go from one buyer to the next wondering if you are getting a fair price, or if you will be able to sell it at all.

Gold is for winners, not for the gamblers

Of course, there is only one Cheltenham Gold Cup to be won this week, but there are plenty of opportunities for punters to win big (and lose) at the bookies. For the £600 million plus that is at stake this week, we wonder if some of those gamblers might be better to take a leaf out of the competitors’ book and ‘go for gold’ instead.

Gold is a form of insurance to protect you when this game goes wrong and the house of cards collapses as it did in 2008.

When it comes to gold, you’re doing the opposite of gambling, you’re buying insurance for the times when others make a bad bet playing with your money. You are taking some of your hard earned ‘chips off the table’ of the global financial casino.

Rather than punting on horses, punters would be better served also having a safe haven punt on gold.

– Follows trend of Netherlands, Germany, Austria and Belgium each looking to bring gold back to home soil

– Hungary one of the smallest gold owners amongst central banks, with just 5 tonnes

– Central bank gold purchases continue to be major drivers of gold market

– Russian central bank gold reserves now exceed those of China

– Decisions to repatriate and increase gold reserves come as rifts between East and West widen

A country’s sovereignty is becoming the driving force of so many changes in the geopolitical sphere, today. Whether it is Brexit, surprise electoral victories in central Europe or a change in trade deals, sovereignty is at the forefront of so many of these decisions.

One of the first indicators that there was a change in the water when it comes to globalisation and international cooperation was through central bank gold buying and repatriation.

For some time now many central banks have been working on building up their gold reserves and ensuring they are stored on soil it believes to be safe and trustworthy.

The most recent central bank to make this change is that of Hungary. Last week it was announced that it intends to bring 100,000 ounces of its very limited 5 tonnes gold reserves, back home from the Bank of England.

This is not an unusual move. In recent years we have seen the likes of Germany, Venezuela and the Netherlands each repatriate their gold from various locations. The pace does appear to have been picking up since the late Hugo Chavez decided to bring home 180 tonnes of gold in 2011.

Furthermore, huge central banks namely Russia and China have been adding to their gold hoards, one more publicly than the other. Both have also been encouraging the use of gold as a means of payment in international trade as a means of avoiding US dollar hegemony.

The decision to place more focus on gold reserves is a statement by central banks and their governments to reduce the counterparty risk on their reserve assets. When holding another country’s currency you are vulnerable, the same applies to when a third-party holds your gold at a time when their own assets are perhaps more exposed than you’re comfortable with.

Russia, China and Turkey leading the gold rush

Hungary’s decision on gold repatriation was not something that made the mainstream news. After all, 100,000 ounces is very little when you consider than Russia increased its physical gold exposure by 20 tons in January 2018 alone.

Hungary decision is, however, a major comment on the current mindset of countries that feel they need to start working to protect their finances and borders. Hungary’s political changes are widely known and have been criticised extensively by both the EU and wider Western world.

The decision to bring gold home is a statement that says Prime Minister Viktor Orban would rather have the country’s assets close to home rather than in the hands-off a country that perhaps does not have his own best interests at heart.

This is a common theme, not just reflected in gold repatriation decisions but also in gold purchases.

Russia, China and Turkey have each materially increased their gold reserves in recent years. Since March 2015 Russia has bought gold every single month. January’s purchase took their reserves above those of China, a level which had previously been monitored as an example of the East’s great interest in moving away from US dollar dominance.

China has been famously coy about its gold reserves. apart from the period from July 2015 to October 2016, China only reported its gold reserve increases at various multi-year intervals. Most recently it has been reporting zero additions to the IMF.

Russia’s reasons for buying so much gold is akin to those of China, Turkey and smaller countries such as Kazakhstan. Gold gives each of these countries independence from the US dollar amid financial sanctions, trade wars and ongoing posturing by the West.

The West is also full of gold bugs

Whilst many in the West are dismissive about gold, the behaviour of central banks suggests quite a different mindset. The top four holders of gold are all from the West. Germany, the second largest has been making big strides of late to show their interest and faith in gold.

Not only did they make the decision to repatriate a late proportion of their gold back to home soil but they also recognised that transparency when it came to the country’s gold reserves was paramount.

‘…another milestone and a global first, an additional fourth step towards increasing transparency was taken with the publication of a list of all German gold bars, totalling around 270,000 in number. The Bundesbank has now published this roughly 2,400-page list three times since October 2015, even though it involved a series of significant challenges. There is no ‘blueprint’ for inventory lists of gold holdings and, in 2015, virtually no central bank in the world had ever released such a list.’

Act like a central bank

Gold cannot be devalued as the euro, dollar, sterling and all fiat currencies currently are. It cannot be confiscated as can deposits through bank bail-ins and it is extremely difficult to confiscate gold coins and bars if owned in allocated and segregated storage in safe vaults in the safest jurisdictions in the world.

Gold is a borderless money that acts as the ultimate reserve and safe haven in a diversified portfolio. This is something central banks are strongly aware of. The difference between the East and West banks is that the East is making big strides to bring gold to the forefront of their international affairs.

By adding gold to their reserves they are gaining equal footing with Western banks who have so far tried to dominate under a US-centric financial system.

Much of the above may sound as though it does not apply to the everyday saver and investor, but that couldn’t be further from the truth. The decision to move assets into physical gold is a decision to take control of your portfolio and to reduce the counterparty risk to which it is exposed. This is no different whether you are a bank with billions or a person with a few thousand.

]]>https://wsgoldcoins.wordpress.com/2018/03/14/hungarys-gold-repatriation-adds-to-growing-protest-against-us-dollar-hegemony-2/feed/0johnking1265March Giveaway: Luck of the Irishhttps://wsgoldcoins.wordpress.com/2018/03/13/march-giveaway-luck-of-the-irish/
https://wsgoldcoins.wordpress.com/2018/03/13/march-giveaway-luck-of-the-irish/#respondTue, 13 Mar 2018 22:08:51 +0000http://wsgoldcoins.wordpress.com/?p=2243With St. Patrick’s Day just around the corner, people will soon be celebrating by wearing green clothing and enjoying some cold beer. The leprechaun-easily recognizable for its small stature, green suit, buckled shoes, red beard, and derby hat-has become the icon of the holiday. But where did leprechaun lore begin?

Eighth-century Irish folklore portrayed leprechauns as mischievous fairies. The name leprechaun is thought to come from either “luchorpan,” meaning small body, or “leath bhrogan,” meaning shoemaker. The legends of these creatures depict them as cobblers. Yet, each leprechaun was said to have his own pot of gold, often found at the end of a rainbow.

Despite their humble careers, leprechauns were believed to be tricksters who could not be trusted. Legend tells that any person lucky enough to spot and catch a leprechaun could offer him freedom in return for his gold. But leprechauns were deceptive by nature and arranging a deal with one could be risky.

While leprechauns of Irish myth originally wore the color red and a tri-colored hat, their image has changed over the centuries into the small green-clad men we’re familiar with today. One thing that hasn’t changed is that is has always been considered good luck to find a leprechaun, though the original legends tell of the creatures luring humans away for good with the promise of treasure.

Mischievous nature aside, leprechauns are said to be merrymakers who enjoy dancing and drinking. This more closely ties into modern celebrations of St. Patrick’s Day. Want to try your luck at winning a bit of your own treasure?

You can enter our giveaway simply by telling us one reason you feel lucky. Commenting below will serve as your entry for our March giveaway. But remember to keep it classy; inappropriate comments will be deleted and disqualified. Submit your comment (one comment only please) by March 25, 2018. One winner will be randomly selected on March 26, 2018 to receive a Welsh Red Dragon 1 oz colorized silver round from the Celtic Lore series.

– Follows trend of Netherlands, Germany, Austria and Belgium each looking to bring gold back to home soil

– Hungary one of the smallest gold owners amongst central banks, with just 5 tonnes

– Central bank gold purchases continue to be major drivers of gold market

– Russian central bank gold reserves now exceed those of China

– Decisions to repatriate and increase gold reserves come as rifts between East and West widen

A country’s sovereignty is becoming the driving force of so many changes in the geopolitical sphere, today. Whether it is Brexit, surprise electoral victories in central Europe or a change in trade deals, sovereignty is at the forefront of so many of these decisions.

One of the first indicators that there was a change in the water when it comes to globalisation and international cooperation was through central bank gold buying and repatriation.

For some time now many central banks have been working on building up their gold reserves and ensuring they are stored on soil it believes to be safe and trustworthy.

The most recent central bank to make this change is that of Hungary. Last week it was announced that it intends to bring 100,000 ounces of its very limited 5 tonnes gold reserves, back home from the Bank of England.

This is not an unusual move. In recent years we have seen the likes of Germany, Venezuela and the Netherlands each repatriate their gold from various locations. The pace does appear to have been picking up since the late Hugo Chavez decided to bring home 180 tonnes of gold in 2011.

Furthermore, huge central banks namely Russia and China have been adding to their gold hoards, one more publicly than the other. Both have also been encouraging the use of gold as a means of payment in international trade as a means of avoiding US dollar hegemony.

The decision to place more focus on gold reserves is a statement by central banks and their governments to reduce the counterparty risk on their reserve assets. When holding another country’s currency you are vulnerable, the same applies to when a third-party holds your gold at a time when their own assets are perhaps more exposed than you’re comfortable with.

Russia, China and Turkey leading the gold rush

Hungary’s decision on gold repatriation was not something that made the mainstream news. After all, 100,000 ounces is very little when you consider than Russia increased its physical gold exposure by 20 tons in January 2018 alone.

Hungary decision is, however, a major comment on the current mindset of countries that feel they need to start working to protect their finances and borders. Hungary’s political changes are widely known and have been criticised extensively by both the EU and wider Western world.

The decision to bring gold home is a statement that says Prime Minister Viktor Orban would rather have the country’s assets close to home rather than in the hands-off a country that perhaps does not have his own best interests at heart.

This is a common theme, not just reflected in gold repatriation decisions but also in gold purchases.

Russia, China and Turkey have each materially increased their gold reserves in recent years. Since March 2015 Russia has bought gold every single month. January’s purchase took their reserves above those of China, a level which had previously been monitored as an example of the East’s great interest in moving away from US dollar dominance.

China has been famously coy about its gold reserves. apart from the period from July 2015 to October 2016, China only reported its gold reserve increases at various multi-year intervals. Most recently it has been reporting zero additions to the IMF.

Russia’s reasons for buying so much gold is akin to those of China, Turkey and smaller countries such as Kazakhstan. Gold gives each of these countries independence from the US dollar amid financial sanctions, trade wars and ongoing posturing by the West.

The West is also full of gold bugs

Whilst many in the West are dismissive about gold, the behaviour of central banks suggests quite a different mindset. The top four holders of gold are all from the West. Germany, the second largest has been making big strides of late to show their interest and faith in gold.

Not only did they make the decision to repatriate a late proportion of their gold back to home soil but they also recognised that transparency when it came to the country’s gold reserves was paramount.

‘…another milestone and a global first, an additional fourth step towards increasing transparency was taken with the publication of a list of all German gold bars, totalling around 270,000 in number. The Bundesbank has now published this roughly 2,400-page list three times since October 2015, even though it involved a series of significant challenges. There is no ‘blueprint’ for inventory lists of gold holdings and, in 2015, virtually no central bank in the world had ever released such a list.’

Act like a central bank

Gold cannot be devalued as the euro, dollar, sterling and all fiat currencies currently are. It cannot be confiscated as can deposits through bank bail-ins and it is extremely difficult to confiscate gold coins and bars if owned in allocated and segregated storage in safe vaults in the safest jurisdictions in the world.

Gold is a borderless money that acts as the ultimate reserve and safe haven in a diversified portfolio. This is something central banks are strongly aware of. The difference between the East and West banks is that the East is making big strides to bring gold to the forefront of their international affairs.

By adding gold to their reserves they are gaining equal footing with Western banks who have so far tried to dominate under a US-centric financial system.

Much of the above may sound as though it does not apply to the everyday saver and investor, but that couldn’t be further from the truth. The decision to move assets into physical gold is a decision to take control of your portfolio and to reduce the counterparty risk to which it is exposed. This is no different whether you are a bank with billions or a person with a few thousand.

– Gold up nearly 10% in last year but performance during recent selloff was short-lived

– The stronger the market pullback, the stronger gold’s rally

– WGC: ‘a good time for investors to consider including or adding gold as a strategic component to their portfolios.’

– Gold remains one of the best assets outperforming treasuries and corporate bonds

A recent World Gold Council (WGC) study has concluded that the market selloff on February 5th made the case for gold as both a diversifier and an asset that protects portfolios during market downturns.

The stock market selloff of early February saw stocks tumble. But, whilst it was sharp it was also short-lived. Many watching the gold price were disappointed to see gold lose around 0.8% of its USD price between February 5th and February 12th, when both the Dow Jones and European stocks and begun to recover losses.

Yet to judge gold on its price performance alone is to misunderstand gold (or, in fact any asset’s) role in a portfolio. In order to appreciate it’s performance one must compare it to other assets as well as it’s long-term behaviour.

Gold’s protection was stronger than you realise

Whilst gold did drop by nearly 1% in USD terms it was a different story for other currencies (which account for 90% of gold demand). This was particularly the case in Europe where currencies weakened against the dollar, increasing gold prices. In euro terms old rallied by 0.9% and 1.8% in sterling, between Friday February 2nd and Monday February 12th.

The 0.8% overall drop in the gold price over the beginning and end of the stock market selloff was not reflective of gold’s performance during the period:

‘[Gold] still outperformed most assets on the week (other than treasuries) and reduced portfolio losses, providing liquidity to investors as market volatility rose.’

“Gold’s effectiveness as a hedge increases with systemic risks”

Gold and stocks are inversely correlated in market downturns. This is thanks to the behaviour of investors who typically show a ‘flight-to-quality’ behaviour.

This benefit of gold is better seen when market crises are broader or last longer than the stock market correction we saw in February.

Examples include Black Monday, the 2008–2009 financial crisis and the European sovereign debt crisis (Chart 5). But there are exceptions.

Gold has been more effective as a hedge when a market correction has been broader (i.e. affects more than one sector or region) or lasted longer.

During the 2001 dot-com bubble burst, the risk was mainly centred around tech stocks and was not enough to elicit a strong reaction from gold; it was not until the broader US economy fell into recession that the gold price responded more sharply. Similarly, investors outside of Europe discounted the possibility of a spill-over from the 2015 Greek default. In recent pullback, as stocks quickly rebounded, gold’s reaction was more muted.

However, taking a longer, more strategic view, is quite relevant.

Looking beyond the short-term stock market selloff

As we often discussed, mainstream media and market commentary have a strong bias towards short-term views. This leads to a very blinkered approach and often an all-too-easy dismissal of gold as a worthy investment.

There has been talk of a stock-market correction for a long-while. Frothy asset prices, pumped-up valuations and the ongoing uptick in stock market prices appeared to be just asking for a market selloff. We finally saw a selloff last month when the DJIA had it’s biggest drop in history. Was this the end of the bubble? Prices did recover but that doesn’t mean it wasn’t the final bell in what has been a long run.

An environment is now forming where a number of corrections are becoming more likely in the near-future. Interest rates are slowly being hiked up, how markets and economies will cope with this after a record-long period of ultra-low interest rates is something we are just beginning to get a taste of.

Trade wars are looming, inflation levels are climbing and political sabre-rattling is growing stronger. With this in mind the World Gold Council reminds us of gold’s ‘four key roles in a portfolio’:

So far, 2018 has been a good case in point of gold’s role as a strategic asset. It has been one of the best-performing asset classes year-to-date, besting treasuries and corporate bonds (Chart 6). It has served as a diversifier and liquidity source as stock markets tumbled. Thus, gold helped investors improve their portfolios’ performance.

‘Consider including or adding gold as a strategic component to portfolios.’

The World Gold Council notes that there has been an increase in bullish positioning in gold options. ‘In our view, this type of bullish positioning suggests that investors may be increasing their portfolio protection against further market downturns…this is as good a time as any for investors to consider including or adding gold as a strategic component to their portfolios.’